Japan’s Reuters Tankan manufacturers’ sentiment index fell to +7 in January (from +10 in December; -3 pts MoM), slipping to a six-month low as weaker global demand weighed on confidence.

• The manufacturers’ index declined for a second straight month (to +7 from +10), though it remained in positive territory, meaning optimistic responses still outnumbered pessimistic ones.

• Materials sectors saw the sharpest deterioration, with oil and ceramics plunging -25 pts to 0, steel falling -11 pts to -44, and chemicals down -5 pts to +6, indicating broad weakness concentrated in heavy industry.

• A steelmaker pointed to a slump in Chinese orders for auto-related items, while a chemical firm cited slower consumer spending in the U.S. and China, linking weaker sentiment to softer demand in major economies.

• The auto and electronic machinery sectors recorded smaller declines, but a machinery maker noted shrinking exports to the U.S. due to tariffs, highlighting trade policy as a headwind.

• Non-manufacturers’ sentiment edged down to +32 (from +33; -1 pt MoM), with the decline led by wholesalers (-10 pts) and retailers (-7 pts), while information, transport, and real estate improved.

• Some services firms cited fewer Chinese tourists amid Japan-China tensions, with a department store reporting foreign tourist sales down -40%, though others indicated inbound demand remains broadly resilient.

• Forward expectations diverged, with manufacturers seeing sentiment recovering to +10 by April, while non-manufacturers forecast a further decline to +26, suggesting services-sector confidence is expected to weaken further.